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HUMAN RESOURCE MANAGEMENT Final Project Report Company: DESCON

Group 1 Muhammad Yasir Qureshi 13020107 Shumail Adnan 13020456 Farhan Shuja 13020533 Ali Haider Malik 13020382

Company Profile

DESCON was established in 1977 to provide engineering services to process plants. Today DESCON is a major player in the region serving the petrochemical, cement, Power, chemical, oil and gas, and infrastructure sectors in the Middle East and Pakistan (Descon, 2013).

DESCON Integrated Projects Limited (DIPL) is a state-of-the-art engineering office with 500 design personnel. DESCON operates seven manufacturing/fabrication facilities in the region to supply industrial process equipment and bulk items like steel structure and piping spools. General contracting is the core activity with large projects executed for owners/operators, major EPC companies and International Oil Companies. This strength is vested in DESCONs experienced project team and a large inventory of equipment. All operations have requisite ISO, OHSAS and ASME certifications in addition to Descon's own QA/QC and HSE standards. The company is driven by clearly defined vision and strives to add value to its clients businesses by providing world-class solutions at cost-effective levels (Descon, 2013).

Descon's Headquarters is located in Lahore, Pakistan. The company is well-established in United Arab Emirates, Saudi Arabia, Qatar and Kuwait with Engineering projects executed in Iraq, Oman and Egypt as well. Joint ventures include Olayan Descon in Saudi Arabia, and Presson Descon International Limited (PDIL), (Descon, 2013). Vision

The vision of DESCON is To become a world-class engineering, manufacturing and construction

company operating internationally. (Descon, 2013). Core Values

Following are the five core values of DESCON:

Professionalism Team work Open Communication Leadership Continuous Improvement

Now we will analyze the company from different Human Resource aspects. We got the following analysis after interviewing a 4th grade HR officer ( theses grades are assigned from 9 to 1, 9 being the lowest and 1 being the highest, company's executives comprise the grades from 4 to 1). We provided him a set of detailed questions and asked to provide the relevant information. We were shown these supporting documents but because of companys privacy policy we were not allowed to take it with us.

Grade 1-9 Table Gratuity form Hiring policy form Performance appraisal form Performance appraisal SOP Policy # 12 and 15 Training sheets (TNA)

Training policy form

Personnel Planning
The operations of the company are project based. Whenever a new project arrives the HR department starts preparing the personnel requirement assessment. It gets reports from the technical staff and other relevant department. The personnels planning is based on the size and duration of the project. Based on the reports from relevant departments and the project budget, the HR department prepares Personnel planning report. This report contains things like the total number of required employees, number of technical employees and how much employees should be kept on permanent and how much on contract basis. Such projects collectively comprise the total employee needs.

Besides this, there are also office employees in the company which are in a very small proportion. Their requirement is assessed by different departments and then HR department is informed. The need for such personnel usually arise when someone resigns or there is expansion in the office like addition of new department

Recruitment and Selection Process

The recruitment guiding is provided in Hiring Policy form in. When asked about the fact that what factors DESCON takes into consideration while deciding whether to advertise internally or externally, the HR officer said that it is basically dependent on the availability of the workforce, if someone is available in the organization, then there is no need to hire from the outside. Furthermore, DESCON does not have a recruitment yield pyramid in place, the HR department downloads the CVs from their data bank and web portals and send these to the respective department. Sometimes,

all the candidates get selected and sometimes they are able to find none through this process. So it is basically dependent upon the need of employees. If they need 10 people for instance, then they will hire the first ten if the candidates have good credentials. DESCON will not go on calling any other candidates just to follow the recruitment yield pyramid because there isnt anything as such in the organization.

The organization uses outside sources for hiring as well. These include headhunters, recruitment agencies, Web portals and employee referrals etc. This allows the HR department to reduce the hiring cost as well. The HR officer presented a case of a job prospect at the spot. His junior manager came into the meeting room and gave him the facts file of a candidate. He told us that he downloaded the CV of that person from a web portal and now he is going to hire that person with no cost other than the time his employees had to spend interviewing the candidate. So it saves cost. Furthermore, the HR department has incorporated technology in their system as well. There is an HRIS, SAP and payroll process in place.

The testing and other selection methods at DESCON include interviews, IQ tests, on the job tests and situation based interviews. The business plan delivers the need of the staff and the timing for which the staff is needed. This is a service providing company so whenever a project comes; they have to hire people hence most of the recruitment plan is affected by the overall business plan. Furthermore, there is a GEP (Graduate Engineer Program) in place for the recruitment of engineers. The reliability and credibility of the candidate is basically checked through his provided documents and interview.

Usually there are three interviews for the candidate. Two of them are taken by the respective

departments or by the line managers and the HR department takes one interview to screen the basic abilities, interpersonal skills, communication skills and the commitment of the candidate. The interview methods include Skype, phone call and face to face. Furthermore, different issues can arise during the interview process, for instance, timing issues, space issues, etc. So the Interviewers take proper measures to make sure that they do not waste their time on candidates that are not of any value for the company. The line manager takes the final decision in the selection process and then HR department negotiates on things like salary and benefits etc.

DESCON quotes the monthly salary at the time it makes job offer. There is also a succession planning in place for critical positions. These positions include Branch/Area Manager, Site Manager, and Planning Manager etc.

There is well cultural diversity in the company. It will hire person from any country in the world if that person is the best suited candidate for a particular job. The company would rather be concerned about the expertise that he has instead of his traditions and cultural values and norms.

Performance Appraisal

The result of appraisals is mostly stated in terms of these 5 performance measure : Unacceptable Partially meeting the expectation Meeting the expectation Exceeding Expectation

Outstanding

The Distribution curve for the appraisal results is shown below:

Forced Distribution for performance evaluation

60 50 40 30 20 10 0 0 1 2 3 4 5 6 7 8 Forced Distribution for performance evaluation

There are three types of Performance appraisals in place: 1. Probation Appraisal 2. Project Performance Appraisal 3. Annual Performance Appraisal.

Probation Appraisal
It is carried out for new permanent employees at the end of their probation period of Six months. Based on the result, the company decides whether to keep a certain employee or fire him. Usually the employees with Unacceptable appraisal result are fired. It is carried out for only the permanent employees by the immediate supervisors.

Project Performance Appraisal

It is applicable on those employees who have spent more than three months on a single project,

regardless of the employee being on permanent or contractual basis. If someone has not spent more than 3 months on a single project then his performance will be appraised in the Annual appraisal.

Annual Performance Appraisal

It is applicable on both the contractual and permanent employees. It is carried out for all the employees in the organization by their immediate supervisors regardless of whether they have been evaluated through project or performance appraisal.

The structure of Performance Appraisal report can be classified into 2 categories based on Grade of employees: i. ii. Grade 1-5 Grade 6-9

First category refers to top-level employees and their appraisal is based 50% on meeting the required objectives and 50% on compliance with companys core principles which include Professionalism, Team work, Leadership and Continuous Performance. The second category employees are appraised solely on the basis of companys core values. The performance appraisal is primarily influential in determining 3 key decisions which are Increments decision, Promotions and Job status change (Contract-based to Permanent). The figure on the next page shows a picture of the Hierarchy according to which the performance is evaluated. Each employee is evaluated by its immediate upper level employee.

Project Manager

Constuction manager

Constuction manager

Area Manager

Area Manager

Area Manager

Lead Engineer

Lead Engineer

Lead Engieer

Engineer

Engineer

Engineer

Assistant Engineer

Assistant Engineer

Assitant Engineer

Supervisor

Supervisor

Supervisor

Lead Man/ Senior Technician

Compensation and Benefits

About the compensation and benefits part, first of all comes the determination of basic salary for new employees. The top factor while deciding the salary is past experience of the employee. This is very important because most of the work is project based. Each project is different from the other and is carried out in different places and different conditions. One who has the experience and can survive the pressure in different conditions is highly successful here. For those with no past

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experience, there comes the second factor in deciding the compensation i.e. qualification. For Example, MBAs who have more professional education are valued more and given high compensation. Another thing that we were told was that the recruiting person sees the past records of a particular university's graduates and based on his experience and expectations he offers the respective salary. A salary sheet is also maintained in computer where database of each employee's salary is kept. The record of salary increments is maintained which helps in determining the salary of new recruits based on the expected benefits they are going to provide. Actually the basic idea here is "Potential based compensation". Before offering a particular starting salary, the HR officer assesses the potential of the employee. It means that how much that particular employee is going to contribute to the revenues? Is paying him an attracting salary worth the benefits he brings? Does higher salary means long term loyalty commitments? Some employees are offered permanent salary and some are offered variable salary based on the project but the above considerations are made for both. About the proportion of employees on permanent salary basis, about 20-25 percent are on permanent and the others on variable salary basis. Mostly higher management and office employees are paid a permanent salary and those who are working in the field on different projects are paid on the basis of the project. Some of the employees are recruited on the contract basis. Their compensation is based on the factors mentioned above. They are given a 6 months' probation period. The increase in their salary is dependent on their successfully completing this period with a satisfactory evaluation result. At the end of the probation period a performance evaluation is prepared by the project supervisor for each employee. On the basis of this evaluation, the decision to change the status of the employee to make

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him permanent is made. Also the decision of salary increment is based on it. The company also hires consultants for its projects. They are mostly aged professionals with a very high experience level. Because their seniority in their field, these consultants are paid very high. The company is satisfied with paying them high as the advantages they help bring in the organization through their expert input which is much more than what they are paid. This was about the compensation for new recruits and the short term hired consultants, now we will look into the increments and other benefits for the regular employees. The general benefits provided by the company to its permanent employees include: Health Care LFA (Leave Fare Assistance) Provident Fund Phone Allowance Gratuity (7 Years) Benevolent Fund Project Allowance Hardship Allowance

These benefits are provided to only permanent employees. Travelling allowance is provided to the employees who are travelling out of their regular work place for less than 30 days. For those travelling for more than 30 days, a permanent assignment is created for them and the residence is provided there. In this case there is no travelling allowance but there are others like living allowance. There is also profit sharing program for permanent employees. They are given a predetermined

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percentage of the profit of the specific project they are working on. This percentage is determined by the project head on the basis of their contribution to the project profits. About the salary increment, its performance based. The performance is determined based on the evaluation results. The performance evaluation is done each year on 30th of June. The company also pays its employees for overtime. Usually grade 7 to 9 employees are paid for overtime. There are also retirement plans for the employees in the form of gratuities. The age for retirement is 58 years. Sometimes after retirement, the former employees are kept as advisors or offered job on contract basis.

Type of employment

Regular Employmees Permanent Employees Benefits LFA Phone Allowane

Consulatants

Contract Employees

Medical

Provident Fund

Gratuity

Benovelent Fund

Project & Hardship allowance

Training & Development

Moving on to the Training & Development options which are available to the current

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employees working at DESCON, the HR officer replied that there is a comprehensive schedule in place to impart such programs for skills enhancement of their employees. These programs include the formal Orientation, Managerial/Supervisory training, teambuilding training and career coaching as well to maintain top notch quality at their corporation. Moreover, it must be remembered that these programs are scheduled on a regular basis. Two comprehensive documents, Training Needs Analysis and Trainings Policy, detail the organizations philosophy related to Training and Development and also serve as a guideline for identification and comparison of prospective trainees knowledge and skillset. In addition to the regular training workshops, DESCON also provides company-sponsored development courses as well which include CSWIP (International Certification in welding, inspection and construction-related jobs) courses, Seminars, Correspondence courses and Leadership development courses to enhance the competency of their employees and enrich their learning experience. Since DESCON has a properly designed system in place to conduct its training and development program, now we turn to the implementation of this program. According to Mr. Rizwan, the organization employs a variety of tools ranging from low-tech methods such as classroom sessions, lectures, role play to computer-based ones, which include Audiovisual based training, online problem sets and others. This shows the diverse ranges of tools employed to deliver the required training while keeping the audience interested in these programs. He stated that while lectures being quite effective and cost efficient in delivering the intended information to a large set of trainees might be perceived as quite boring therefore they also incorporate Audiovisual based training, although quite expensive, to simulate real-time problems and employee reactions to keep them engaged in the learning phase. Moreover, since their organization is a multinational, therefore

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transportation of these trainers to every place is not feasible for the company and AV-based training conveniently resolves such hassle. DESCON primarily deals in the engineering sector hence a visual tour of factory, its machinery and workplace does a good job in exposing trainees to situations and procedures which might not be easily demonstrable by a lecturer in a classroom. In addition to these measures, we also noticed that Job rotation is also a commonly practiced method of training at DESCON. At DESCON, the three most important training needs which were identified as a stimulus or an indicator for implementing such programs are Job performance gap, Future growth prospects and development potential of the employees under consideration. However, these Training and Development programs are primarily generic in nature, instead of being employee-specific since they cannot afford to formulate and conduct customized training programs which can be very expensive. Yet there are department-based trainings too which are conducted on regular basis. Upon further enquiry about whether their training and development programs enable the employees to move from technical to management career path, he replied in affirmative and referred to TAP (Target Assessment Program). He further stated that the management at DESCON also conducts a formal evaluation at the end so as to improve the training process and increase its effectiveness. When we asked the HR officer about the availability of diverse range of training opportunities that can productively enhance the professional capacity of their employees, he stated that these can be categorized as Executive training, Computer training, Leadership training and Literacy training. On an ending note, we asked him to rank some of the options with regard to the significance that their HR department attaches to the training process. On this query, he classified these options as follows, beginning with the most important one at the top; 1. Increase Productivity

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2. Achieving Organizational goals 3. Achieving Targets 4. Reducing Wastage (Saving costs)

Recommendations
The recruitment process in the company is highly manual. The HR officer in charge has the full authority to use whatever sources he wants. Sometimes he uses his personnel contacts and sometimes goes to online web portals to collect CVs. We believe that this approach wastes time and resources and at the end there is a chance that a suitable individual is not selected for a particular job. For example, we were told that once the HR department spent 100,000 rupees on recruitment drive but were not able to find a single suitable individual. We suggest that the company should have a proper procedure to recruit new individuals. There should be recruitment drives in different university which represent a pool of highly energetic and competent individuals. Formal advertisements should be given in different online media. In short, there should be a standard procedure to recruit the individuals instead of random selection by HR people.

Although the company uses computer for performance data keeping but there should be special performance tracking modules of computer software. It will help the individuals in tracking their performance.

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